Vital Signs Blog

Rockefeller says drug companies should pay for ‘doc fix’

Sen. Jay Rockefeller IV Rockefeller
Sen. Jay Rockefeller (D-W.Va.) says drug companies can pay for the sustainable growth-rate repeal.

A day after leaders in the Senate and House floated a bipartisan proposal to replace Medicare's hated physician pay formula—but not a plan to pay for it—Rockefeller is pointing to a bill he introduced back in April as a way to make the fix budget-neutral.

The Congressional Budget Office has estimated that repealing the SGR would cost about $139 billion over 10 years. Finding a way to offset this figure has been an obstacle to scrapping the formula, which currently calls for cutting Medicare pay to physicians by 24.4% at the start of next year. Congress has been approving temporary postponements of SGR-driven pay cuts for 10 years now, and the cost of these legislative “patches” has been estimated at almost $150 billion.

In 2003, the Medicare Modernization Act moved low-income Medicare patients from the Medicaid drug benefit (which has rebate pricing) to Medicare's drug benefit, which doesn't have rebate pricing. Rockefeller's Medicare Drug Savings Act calls for returning rebate pricing to dual eligible beneficiaries, which the senator says will generate $141.2 billion over 10 years—enough savings to offset the cost of SGR repeal.

“We have a unique opportunity to provide stability to Medicare beneficiaries and their doctors by permanently fixing the SGR,” Rockefeller—chairman of the Senate Finance Committee's healthcare subcommittee—said in a statement e-mailed to Modern Healthcare.

“I know of only one way to do this that can provide certain savings without any harm to beneficiaries or the healthcare system they rely on. By returning to rebated pricing for the drug benefit for low-income Medicare patients, we can provide the necessary savings through a policy that works for both patients and industry.”

The Pharmaceutical Research and Manufacturers of America, or PhRMA, opposes Rockefeller's plan, arguing that Medicaid's price controls have failed while Medicare Part D costs continue to plummet.

“Part D is now 45% below the cost originally expected,” Matt Bennett, PhRMA senior vice president, said in a statement released to the media. “In each of the last three years, the Congressional Budget Office has reduced its successive 10-year cost projections for Part D by more than $100 billion. Part D premiums are about $31 per month in 2014 —less than half the level originally projected.”

According to Bennett, Part D saves beneficiaries money and that “imposing punitive policies on the biopharmaceutical research sector” could cause job losses.

“Imposing rebates in the form of government price controls on a program that works well would not yield any benefit for seniors,” he said. “Instead, analysts have projected that rebates could harm Part D's competitive dynamics, yielding higher premiums, more restrictive access to medicines and diminished research on the next generation of medicines.”

Rockefeller's bill was referred to the Senate Committee on Finance on April 16. No action has been taken since then.

Follow Andis Robeznieks on Twitter: @MHARobeznieks


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